DETROIT, Nov 9 (Reuters) - General Motors Co (GM.N) posted a lower third-quarter profit on losses in Europe and offered a disappointing outlook that raised doubts about the speed of its turnaround two years after emerging from bankruptcy.

GM vowed to slash costs to shore up margins and said it would consider closing plants in its sputtering European unit, but its fourth-quarter outlook disappointed investors and sent shares tumbling 11 percent on Wednesday.

The percentage drop was the largest one-day decline since the company’s initial public stock offering in November 2010.

Worries about slowing growth in key markets like Brazil and the continued drag from Europe prompted questions about whether the top U.S. automaker had taken its foot off the pedal after a 2009 taxpayer-funded restructuring wiped away its debt.

Chief Executive Dan Akerson called the third-quarter profit of $1.7 billion “solid” but quickly added “solid isn’t good enough,” an unusually stark assessment from a company long-criticized for moving too slowly to admit mistakes and force changes.

GM exceutives conceded the automaker needed to follow Ford Motor Co (F.N) in streamlining historically tangled operations. Under the slogan “One Ford,” CEO Alan Mulally has pushed GM’s smaller rival to unify its vehicle development and purchasing over the past five years.

“You just can’t turn on a dime,” said Mirko Mikelic, senior portfolio manager with Fifth Third Asset Management, who said GM’s turnaround remained complicated by the U.S. Treasury’s 27 percent ownership stake.

“I don’t think the U.S. government wanted to see them do a scorched-earth policy — go into bankruptcy and radically change everything — because that would have had an impact not only on GM but their suppliers, and that would have hurt the overall industry,” he said.

The biggest drag on GM’s third-quarter results came from Europe, where the automaker posted a $300 million loss. GM opted to keep the German Opel brand two years ago after saying it would sell the unit, but it has struggled to turn around its European operations since. On Monday, GM announced it would change its top executive in Europe. [ID:nL6E7M72P8]

“The big story today is going to be what looks like a pretty disappointing fourth-quarter outlook,” said Citi analyst Itay Michaeli, who has a “buy” rating on GM’s shares.

EUROPEAN ‘MORASS’

GM said it now expected a full-year loss in Europe, an economy Akerson described as a “morass.” Akerson also vowed more cuts in Brazil after reducing 4 percent of the automaker’s jobs there in the current quarter.

“We need to do a better job in Europe and South America. The results there are not sustainable and not acceptable,” said Akerson, who became CEO just over a year ago.

Chief Financial officer Dan Ammann said nothing was “off the table” in restructuring GM’s European operations, including closing plants. Unions and politicians in Europe have resisted plant closures, stranding the industry with excess capacity.

Opel labor leader Klaus Franz said he was “astonished” by the threat of a potential plant closing, saying GM’s current labor deal barred closures and factory job cuts through 2014.

Executives said GM needed to improve profit margins, which fell to 6 percent in the third quarter, from 6.7 percent a year earlier. Ammann said GM has a plan to boost margins closer to 10 percent.

“We’re being very clear that we’re not getting as much leverage out of our scale as we should be, that our margins aren’t where we want them to be,” he said.

GM’s third-quarter net income fell to $1.7 billion, or $1.03 a share, compared with $2 billion or $1.20 a share in the year-earlier period. Revenue rose 8 percent to $36.7 billion.

The contrast between GM and Ford was striking.

Ford last month posted third-quarter net earnings that were nearly as high as GM’s, on revenue that was 10 percent lower. Ford, the only U.S. automaker to have avoided bankruptcy, ended the quarter with almost $13 billion in debt.

GM, which boasts that its taxpayer-funded restructuring left it with a “fortress balance sheet,” ended the quarter with less than $3 billion in long-term debt.

Profit in Asia fell 29 percent as growth in China slowed. Results in South America swung to a loss of $44 million as market share fell due to an aging lineup.

GM has the largest market share in China and sold its November 2010 IPO partly on the company’s strength in China, raising concerns for investors if the largest global vehicle market slows.

Akerson said GM’s China sales were outstripping industry-wide growth in the world’s largest vehicle market and said he saw no interruption to gains there. “China is a good story if it holds,” he said.

GM emerged from bankruptcy in 2009 after a $52 billion taxpayer-funded bailout. How and when the U.S. Treasury unwinds that stake remains an uncertainty for investors and taxpayers.

As GM’s share price has slipped well below last fall’s $33 initial public offering price, Treasury officials have maintained they will not rush to sell the government’s remaining stake. [ID:nN1E7920KK]

Coming out of bankruptcy, Akerson and other executives said the company stripped out enough costs to make the business recession-proof.

On Wednesday, GM said it expects fourth-quarter adjusted earnings before interest and taxes to be similar to the same quarter last year.

Shares of GM closed down 10.9 percent at $22.31 on Wednesday, not far off the day’s low of $22.15. Its shares are down 43 percent from the 12-month high of $39.47 reached in January. (Reporting by Ben Klayman, Deepa Seetharaman and Bernie Woodall in Detroit; Editing by Derek Caney and Matthew Lewis)